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FICO makes the formulas and programs for all credit reporting agencies. The names of formulas and actual procedures are different from agency to agency, the basic factors affecting credit score are however the same and the basic formula and its constituents remain the same. The three different models for credit scoring by FICO include, BEACON score used by Equifax, Experian/Fair Isaac Risk Model used by Experian and EMPIRICA used by TransUnion. The companies do not disclose the exact formulas but as per FICO resources, the following are the things that make up a credit score and also tend to affect the score.

* Payment History (35%): The payment history basically consists of all your past accounts and the regularity with which payments have been made. A bad and irregular payment history causes the score to drop down.

* Amounts Owed (30%): The total amount of debts owed to other lenders is also an important consideration in the score calculation. The standard equation is, more the amounts owed, less is the credit score. Hence keep the credit history and current liabilities to the bare minimum.

* Length of Credit History (15%): The length of the credit history is also considered. Rule of the thumb is that longer the history, lesser is the score. Thus avoid unnecessary borrowings and keep them to the bare minimum.

* New Credit (10%): New credit consists of the newly borrowed loans or newly taken up credit cards. Keeping it small always helps, as the lesser the new credit, the better is the credit score.

* Types of Credit Used (10%): The types of credit such as credit cards, types of loans and other credits such as buy now pay later, constitute the score.

This proportion is applied to get a number on the credit core rating sale, which usually extends from 500 to 850 or in some cases, 300 to 750. This credit score scale may differ as...

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